SOF TODAY | The Jobs Smoother: 2021 employment coming into view

By | March 30, 2021

Each month, the team of experts at FTR takes a look at the payroll employment report from the Census Bureau. It gives a timely indicator of the health of the economy. In a “normal” year the downside is that the numbers can be somewhat volatile in any given month (+/- 100k is the typical margin of error). We account for the variation by looking at the average monthly gains smoothed over the last 3 and 6 months. This gives us the added benefit of being able to better highlight if employment indicators are accelerating or decelerating.

In this post we will review these numbers and see if they are highlighting anything important. The data for 2020 is clearly skewed by the huge losses and gains that occurred during Q2, but taking a longer view gives us the ability to keep some of that in perspective.

Payroll Employment

Let’s start by highlighting the top line figures and then we’ll assess the overall health of jobs in the US. The unemployment rate was little changed in February at 6.2%, but this number continues to not fully reflect some of the additional stresses that are in the system due to loss of hours and removal from the workforce due to COVID shutdowns.

February saw improved results with the payroll employment numbers showing a net gain of 379,000 jobs for the month. February’s gain was the best reported figure since last October. This came on the heels of an improved result for January of a 166k gain, but December was still notably weak with a loss of 306k. December was the first loss since the April report, in which we saw employment drop by more than 20 million.

So is that 379k gain good or bad? When we compare it to the 10-year average figure, sitting right at 100k, it looks pretty good, but the average over the last 3 months is just 80k. This indicates that we are merely doing okay, not great. We will need to see a string of months with 300k-500k payroll gains to make real progress on the employment front since payroll employment is still more than 9 million jobs below where it was at one year ago in February 2020.

Looking at our jobs smoother graph (below) we can see that the overall employment figures are still all over the board, but, thankfully, the most recent data is moving in the right direction. FTR expects payroll growth to return in 2021, but the pace of that growth is yet to be known.

Transportation Employment

Local delivery was the only goods transportation sector to show employment growth in February. The sector added 9,000 payroll jobs. Year over year, parcel and local delivery has ADDED 147,500 jobs, or 16.7%.

Despite the positive top-line figure and the gains in delivery employment, payrolls at for-hire trucking declined by 4k jobs, after a revised gain of just 800 jobs in January. January and February clearly show weaker hiring after the nearly 29,000 payroll jobs that for-hire trucking added in Q4 of last year. Truck employment is still down 49k jobs from last February’s peak.

Looking at our jobs smoother graph (below) we can see that the employment numbers have notably weakened over the last 6 months. I had expected to see better payroll gains for the start of 2021 – this may indicate additional stress on the ability for carriers to attract and retain drivers as other parts of the economy resume activity. If you are wondering why the markets are remaining tight as we hit one year on from the pandemic, keep this point in mind.

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